WD RECERTIFIED — HIGH QUALITY PRODUCTS AT A GREAT VALUE

Statements in these posted remarks that relate to future results and events, and other forward-looking statements in these remarks, are based on Western Digital Corporation’s current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties. These risk factors include:

the impact of continued uncertainty and volatility in global economic conditions;

supply and demand conditions in the hard drive industry;

uncertainties concerning the availability and cost of commodity materials and specialized product components;

actions by competitors;

unexpected advances in competing technologies;

uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets;

business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; and

other factors listed in our periodic SEC filings and on this website in Risk Factors.

Robert Blair - Investor Relations

I want to mention that we will be making forward-looking statements in our comments and in response to your questions concerning: growth in the storage industry; the timing of our pending divestiture transaction with Toshiba; capital spending; and industry conditions and our financial results expectations for the June quarter. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including those listed in our 10-Q filed with the SEC on January 27, 2012. We undertake no obligation to update our forward-looking statements to reflect new information or events.

In addition, references will be made during this call to non-GAAP financial measures. Reconciliations of the differences between the historical non-GAAP measures we provide during this call to the comparable GAAP financial measures are included in the investor information summary posted in the Investor Relations section of our Web site. The forward-looking guidance we provide during this call excludes charges related to the Thailand flooding net of recoveries, expenses related to the HGST acquisition and any impact from the pending divestiture transaction with Toshiba. Because the amount of these items is not known to us at this time, we are unable to provide guidance for, or a reconciliation to, the most directly comparable GAAP financial measures. The impact of these excluded items may cause the estimated non-GAAP financial measures to differ materially from the comparable GAAP financial measures.

We ask that analysts limit their comments to a single question and one follow-up question. I also want to note that copies of remarks from today’s call will be available on the Investor section of Western Digital’s website immediately following the conclusion of this call.

John Coyne - Chief Executive Officer

Good afternoon and thank you for joining us on today’s call. After my introductory remarks Wolfgang Nickl, our CFO, will review our Q3 financial performance and the outlook for the fourth quarter.

We are delighted to report these exceptional financial results, for the March quarter, demonstrating the potential of the new WD, with just three and a half weeks of HGST results added to the standalone WD business.

Competing in the marketplace, through our WD and HGST subsidiaries, we now have the product portfolio, technology resources and the people to focus on serving the needs of a significantly expanded customer base and to better address the tremendous growth opportunities in the storage industry in the years ahead.

IDC expects the amount of digital storage capacity shipped across all digital storage media will more than double by 2015 from 767 exabytes in 2012, with HDD storage responsible for roughly 70 percent of exabyte shipments over this time frame -- driven by mobility, connectivity, and the cloud. These dynamics create the need for an increasingly diverse set of products and technology capabilities from storage solutions providers.

Rotating magnetic storage continues to be the dominant technology in these highest volume, high capacity storage markets based on availability, scalability, usability and value.

A recently updated IDC forecast calls for hard drive unit volume growth of 10 percent per year from 2011 to 2016 -- another indicator of the tremendous growth opportunity at hand for the new WD.

When we announced the HGST acquisition in March 2011, we emphasized that this would be the hard drive industry’s first ever transaction involving two profitable and growing companies and that this was significant because of the resultant customer breadth and product breadth, depth of technology, people and scale. We are highly focused on what we believe is a tremendous revenue opportunity for the new WD based on the value proposition offered to our customers by each subsidiary. We aim to continue the strong track record of customer delight and superior financial performance of each subsidiary while delivering efficiencies consistent with regulatory requirements.

It is noteworthy that during more than 12 months of regulatory reviews and two natural disasters, the WD and HGST teams maintained full engagement with customers and continued to invest and execute to develop and deliver multiple innovative products. I call your attention to an impressive list of recent innovations outlined in the expanded quarterly investor summary report on our website.

The industry’s first 7,200 RPM, 2.5-inch, 7mm, 500GB Travelstar™ Z7K500 mobile hard drive - extending our lead in the low profile drive market where to date we have shipped more than 25 million 7mm hard drives for use in slim notebooks and Ultrabooks™.

We also announced the formation of a consortium with SanDisk, Twentieth Century Fox and Warner Brothers to advance digital distribution and consumer ownership of high definition movies.

With the HGST acquisition now closed, we are working closely with China’s Ministry of Commerce to finalize our operations plan in compliance with the remedy outlined in MOFCOM’s approval decision last month.

Concurrently, Toshiba is awaiting the completion of the regulatory review process associated with its agreement to acquire certain WD and HGST assets, a process that is expected to be completed within the next 90 days. In the meantime, we continue to support customer demand for the products covered by the anticipated Toshiba transaction.

I am also pleased to announce today that the recovery activities related to both WD operations and those of our supply chain partners impacted by the Thailand floods have reached a point where we now have the capability to adequately meet anticipated customer demand in the current quarter and beyond. Our subsidiaries are now focused on profitably serving customer needs in terms of both mix and volume.

We have navigated successfully through a series of significant events in the last year—including the earthquake and tsunami in Japan which had a substantial supply chain impact on both HGST and WD, and the floods in Thailand which knocked out almost 90 percent of WD slider availability and 60 percent of WD drive assembly capacity and a substantial portion of the industry supply chain. Concurrently, we completed the largest acquisition in the history of the hard drive industry. I want to thank our customers and suppliers for their strong support throughout this time and to congratulate and thank all our employees whose dedicated efforts have delivered such outstanding results.

As I look at the opportunities for Western Digital in the quarters and years ahead, I cannot think of a more exciting time to be leading this talented team.

We have just delivered the strongest revenue and profit performance in the company’s 42-year history, with the contribution of less than a month of HGST performance.

We have a series of upside opportunities that have energized our team.

Against a backdrop of a recovering industry TAM in the near term and the storage industry’s significant growth opportunity in the long term, we are focused on delighting our customers with an improving mix of compelling products, growing to full utilization of our installed capacity over time and continuing the measured deployment of our newer technologies.

With that, I will turn the call over to Wolfgang for a review of our Q3 financials and our outlook.

Closing Remarks
I want to thank all of your for joining us today. We are very excited about the growth opportunities in the data storage industry and about the new WD’s ability to participate in this market as a leader in the years ahead. We look forward to updating you our progress.

Wolfgang Nickl - Senior VP Finance & Chief Financial Officer

A summary of historical financial information has been posted to the Investor Relations section of our website. We have also included a detailed GAAP to Non-GAAP reconcillation in this package.

I would also like to remind you that we have announced our investor day to be held on September 13, 2012 here in Orange County. On that day we expect to discuss our strategy for our core business, growth opportunities, our go-forward business model and our cash utilization strategy.

Today, I will first summarize our financial performance for last quarter and will then provide a range of expected financial results for the June quarter.

The data for our third fiscal quarter includes HGST results from the acquisition date of March 8th through the end of our quarter.

Revenue for the March quarter was $3.0 billion including $614 million for HGST.

We shipped a total of 44.2 million hard drives at an average selling price of approximately $68.

OEM sales represented 64 percent of revenue, distribution channel sales were 28 percent, and retail sales were 8 percent. The retail channel percentage was lower than prior quarters due to a total available market that is running at about one half of last year’s run rate and HGST’s lower presence in that channel.

Our gross margin for the quarter was 32.2 percent. This includes acquisition accounting related adjustments. Excluding these adjustments, non-GAAP gross margin was 35.5 percent. Average cost per unit continues to run above pre-flood level due to lower capacity utilization, increased use of airfreight, a higher mix of externally procured heads, and higher costs for other components as a result of the flood’s impact on our supply chain partners.

R&D and SG&A spending totaled $420 million for the March quarter. SG&A included acquisition-related expenses of $33 million and $3 million of amortization expense related to intangibles recorded through the purchase price allocation. R&D and SG&A spending reflect continued investments in new product and market development, particularly in the branded and enterprise areas.

Flood-related expenses totaled $36 million, which was offset by $21 million in insurance recoveries and other cost reimbursements. During the quarter, we filed a significant claim for property damage, which is currently in the early stage of evaluation by our insurance carriers. We also expect to file business interruption and other claims.

Net interest and other non-operating expense was $4 million, including $1 million of credit commitment fees prior to the acquisition.

Tax expense for the March quarter was $55 million, or 10.2 percent of pre-tax income.

Our net income for the March quarter totaled $483 million, or $1.96 per share. On a non-GAAP basis, net income was $619 million, or $2.52 per share.

Turning to the balance sheet, we generated $1.2 billion in cash from operations during the March quarter, and our free cash flow totaled $1.1 billion, significantly enhanced by the timing of the acquisition.

Capital spending and depreciation and amortization for the March quarter totaled $139 million and $188 million, respectively. Through the first nine months of fiscal 2012, we have spent $393 million on capital. We expect capital spending of approximately $357 million for the current quarter, bringing the total for fiscal year 2012 to approximately $750 million, inclusive of HGST capital spending for the June quarter. Capital expenditures for the June quarter will be driven by flood recovery, technology investments and investments in process capability as opposed to capacity expansion. As a reminder, we report capital spending based on cash disbursements. Thus, the capital disbursements expected for the June quarter primarily reflect capital that was received during the March quarter.

Our conversion cycle was a positive 5 days. The DSO, DIO and DPO calculations, as well as inventory turns, are skewed by the fact that our March ending balance sheet includes full HGST accounts receivable, inventory and accounts payable, but our revenue and cost of sales include only 3 and a-half weeks of HGST operations.

We exited fiscal Q3 with total cash and cash equivalents of $3.4 billion, with approximately $1.3 billion in the U.S. and $2.1 billion offshore. Subtracting our total debt of $2.7 billion, results in a net cash balance of $634 million.

The HGST purchase price for accounting purposes was approximately $4.7 billion. Our purchase price allocation included goodwill of approximately $1.7 billion and other intangibles of about $800 million. On a full quarter run-rate basis, we expect the intangibles to drive amortization expense of approximately $50 million. These amounts are preliminary. Updated amounts will appear in the 10-Q we will file in early May.

Let me now provide some context for our guidance for the June quarter.

We expect a TAM for the June quarter in a range of 155-160 million units. We believe there is sufficient capacity in the industry to support this demand.

From a volume perspective we have modeled the previously announced divestiture of certain 3.5-inch assets to Toshiba to close towards the end of May.

With regard to pricing, it is important to note that our WD subsidiary was the most heavily impacted of any drive company by the floods in Thailand last October. WD asked for and received customer support to enable a rapid recovery. Now that this recovery is essentially complete, WD is forecasting pricing reflective of current market conditions.
After we closed the acquisition we learned that our HGST subsidiary, which was not directly impacted by the flood, had implemented multi quarter agreements with certain customers that provided for June pricing below March pricing, subject to the achievement of certain volume goals.

The WD subsidiary continues to operate with substantial underutilized capacity and at a supply mix of external heads in excess of the subsidiary’s strategic sourcing model. Both factors lead to a cost disadvantage of several dollars when compared with pre-flood levels.

While we are identifying OPEX synergies that are consistent with regulatory requirements, we are not factoring any of these synergies into our guidance as we are currently working with China’s MOFCOM to finalize the Operations Plan which we submitted earlier this month. In addition, we are continuing investments in strategic growth areas such as SSD, hybrid drives and the digital home.

From a gross margin perspective, we believe that product mix and cost will provide significant future upside potential for our businesses as they manage the deployment of new areal densities in a measured fashion.

I also want to note that our guidance is on a Non-GAAP basis. It excludes amortization of intangibles related to the HGST acquisition of approximately $40 million in cost of sales and $10 million in OPEX. It also excludes any P&L impact from the pending divestiture of 3.5-inch assets to Toshiba and any potential restructuring activities.

Our forecast does not include any acquisition or flood-related expenses; nor does it factor in any flood related insurance proceeds during the quarter.

With these factors in mind, our June quarter guidance - including a full quarter of HGST - is as follows:

We expect revenue to be in the range of $4.2 billion to $4.4 billion.

R&D and SG&A spending will be approximately $550 million.

We expect our tax rate to be approximately 9 percent of our-taxable income.

We anticipate our share count to be approximately 269 million.

Accordingly, we estimate non-GAAP earnings per share of between $2.35 and $2.55 for the June quarter.